February 2016

Volume 4, Issue 3

Posted on 2/25/2016

FDIC Board Approves Proposal on Deposit Account Requirements to Facilitate Timely Access to Deposits in Large Bank Failures
The Federal Deposit Insurance Corporation (FDIC) today approved a proposal for recordkeeping requirements for FDIC-insured institutions with a large number of deposit accounts to facilitate rapid payment of insured deposits to customers if the institutions were to fail.

The proposed rule would apply to insured depository institutions with more than 2 million deposit accounts. Under the proposal, these institutions would generally be required to maintain complete and accurate data on each depositor. Further, the institutions would be required to ensure that their information technology systems are capable of calculating the amount of insured money for each depositor within 24 hours of a failure. The FDIC is not proposing or considering making these requirements applicable to smaller institutions, including community banks.

The FDIC is required to provide depositors with access to their insured accounts as soon as possible after an institution fails. Typically, this money is available by the next business day. However, for a bank with a large number of deposit accounts, payments might be delayed if the bank's records are unclear or incomplete, making it difficult to determine what is insured and what is not. A failed bank with multiple deposit systems, or a sudden failure with little advance notice, could further complicate this work.

The FDIC issued an advanced notice of proposed rulemaking on deposit account recordkeeping for institutions with a large number of deposit accounts in April 2015 to solicit public comment.  The FDIC will accept comments on the proposal for 90 days after it is published in the Federal Register.
FinCEN Seeks Comment on Revised Layout and Proposed Additional Data Fields for the Bank Secrecy Act Currency Transaction Report
FinCEN published the revised Bank Secrecy Act Currency Transaction Report ("BCTR") in March 2011. The BCTR was designed to facilitate financial institutions reporting the most frequently encountered transaction scenarios. Since that time, FinCEN has become aware that the current report is not configured to allow for alternative reporting models that have developed in the last few years, such as reports filed by a parent company on behalf of its subsidiary. To remedy some of the limitations of the current BCTR, FinCEN now proposes an amended report. This notice does not propose any new regulatory requirements or changes to the requirements related to currency transaction reporting, but rather seeks input on technical matters designed to improve the layout and reporting of the BCTR. For more detailed information, click here. The deadline to receive comments is on April 4, 2016.

Guidance for a Risk-Based Approach for Money or Value Transfer Services.
Money or Value Transfer Services (MVTS) play an important role in the international financial system and in supporting financial inclusion. Like other financial institutions, MVTS providers are also vulnerable to the abuse for the purpose of money laundering and terrorist financing. 
The Financial Action Task Force (FATF) has updated its 2009 Guidance on a Risk-Based Approach for Money Services Businesses to bring it into line with the 2012 FATF Recommendations. This non-binding Guidance is intended to assist countries and their competent authorities, as well as the practitioners in the MTVS sector and in the banking sector that have or are considering MVTS providers as customers, to apply the risk-based approach associated to MVTS. The risk-based approach, the cornerstone of the FATF Standards, requires that measures to combat ML/TF are commensurate with the risks. Such measures should not necessarily result into the categorisation of all MVTS providers as inherently high-risk. The overall risks and threats are influenced by the extent and quality of regulatory and supervisory framework, as well as the implementation of risk-based controls and mitigating measures by each MVTS provider. While this Guidance is applicable to the entire MTVS sector (both banking and non-banking institutions offering MVTS); it is primarily intended for non-banking MVTS providers. This Guidance should be read in conjunction with other relevant Guidance, in particular FATF Guidance for a Risk-Based Approach: The Banking Sector. For more information, click here

Volume 4, Issue 2

Posted on 2/18/2016

Health Savings Act of 2016 (S.2499 and H.R. 4469)
The Health Savings Act of 2016 would exempt employee contributions made to HSAs from the Affordable Care Act's Excise or Cadillac tax and streamline administration of HSAs for all Americans. To read more, click here
FDIC Seeks Comment on Revised Proposal to Amend How Small Banks are Assessed for Deposit Insurance
The Board of Directors of the Federal Deposit Insurance Corporation (FDIC) today sought comment on a revised proposed rule that would amend the way small banks are assessed for deposit insurance.

The proposed rule would affect banks with less than $10 billion in assets that have been insured by the FDIC for at least five years. It would update the data and revise the methodology that the FDIC uses to determine risk-based assessments for these institutions to better reflect risks and to help ensure that banks that take on greater risks pay more for deposit insurance than their less risky counterparts.

The proposal follows an initial proposed rule on small bank assessments issued in June 2015. The updated proposal reflects comments received last year on topics including the calculation of asset growth and the treatment of reciprocal deposits and Federal Home Loan Bank advances.

Like the initial proposal, the revised proposal would be revenue neutral, so that aggregate assessment revenue collected from established small banks is expected to be approximately the same as it would have been otherwise. The FDIC has revised the online assessment calculator that allows institutions to estimate their assessment rates under the proposal to reflect the updated proposal.

The FDIC is seeking comment on the updated proposal to ensure the public has the opportunity to provide feedback on the revisions. Comments on the proposed rule will be received for 30 days following publication in the Federal Register.
FinCEN Issues Advisory on the FATF-Identified Jurisdictions with AML/CFT Deficiencies
The Financial Crimes Enforcement Network (FinCEN) today issued an advisory to financial institutions regarding the Financial Action Task Force's (FATF) updated list of jurisdictions with strategic anti-money laundering/counter-terrorist financing (AML/CFT) deficiencies. These changes may affect U.S. financial institutions' obligations and risk-based approaches regarding relevant jurisdictions. FinCEN's advisory can be viewed by clicking here

Initial Detection and 30 Days for SAR Filing
As clarified in the May 2006 SAR Activity Review: Tips, Trends & Issues (Issue 10), the phrase "initial detection" should not be interpreted as meaning the moment a transaction is highlighted for review. There are a variety of legitimate transactions that could raise a red flag simply because they are inconsistent with an accountholder's normal account activity. A real estate investment (purchase or sale), or the receipt of an inheritance or gift, for example, may cause an account to have a significant credit or debit that would be inconsistent with typical account activity. An institution's automated account monitoring system or initial discovery of activity, such as system-generated reports, may flag the transaction for review; however, this should not be considered initial detection of potential suspicious activity. The 30-day (or 60-day) period does not begin until an appropriate review is conducted and a determination is made that the transaction under review is "suspicious" within the meaning of the SAR regulations. Institutions may have implemented multi-layer review procedures.

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